Bengaluru: A landmark agreement was reached on the first day of the Conference of Parties 28 (COP28) in Dubai, United Arab Emirates (UAE), to approve the Loss and Damage (L&D) Fund — a reparations scheme for low-income countries that have suffered from the cumulative carbon emissions of wealthy countries.
The decision to adopt the fund was unanimous and was greeted with applause and cheers at the voting session Thursday.
Harjeet Singh, the head of global political strategy at Climate Action Network International, said in a statement: “The responsibility now lies with affluent nations to meet their financial obligations in a manner proportionate to their role in the climate crisis, which has been primarily driven by decades of unrestrained fossil fuel consumption and a lack of adequate climate finance delivered to the Global South.”
The fund aims to provide financial assistance to low and middle-income countries (LMICs), also known as developing nations by the UN, for coping with and recovering from the economic and non-economic losses caused by climate change.
The fund has received an initial pledge of over $470 million from various countries, with the European Union contributing $275 million, the UK $75 million, UAE $100 million, the US $17.5 million, and Japan $10 million USD.
The fund was proposed at the COP27 in Egypt last year, after intense negotiations, as a way to compensate poorer nations with low carbon footprints who are bearing the worst impacts of climate change, mainly due to the cumulative emissions from the social and industrial development of wealthy countries.
The adoption comes a few months after the latest Intergovernmental Panel on Climate Change (IPCC) report released in March this year, which revealed that billions of people are already experiencing loss and damages from climate change, that these are inevitable and unequal, that they are not adequately assessed at the global level, and that they will increase sharply with global warming.
India, as one of the UN’s ‘developing’ countries, has expressed its support for the operationalisation of the Loss and Damage Fund.
The fund will be administered by the World Bank, which is its interim trustee until a hosting agreement is finalised by the member countries. All LMICs are eligible to apply for funds from the reserve and are also encouraged to make financial contributions where possible.
Cumulative emissions & historical responsibility
The Industrial Revolution, which started in the UK in the mid-18th century and spread to the rest of Europe and the US, marked a significant increase in human emissions and environmental impact.
The revolution was defined by factors such as high agricultural yield, transportation system for moving raw and processed materials, trained personnel who can facilitate it, natural resources for fuel such as coal, financial capital for investing in businesses, and supportive political and legal systems.
The exact beginning of the Industrial Revolution is not clearly defined, but for climate science purposes, it is considered to be 1850, by which time these systems were in place almost globally.
Electricity became available globally, and food policies changed as crops became abundant and staple. Roads and railways were built everywhere by colonial powers, who also set up factories everywhere.
Steam engines reached their maximum efficiency, and new industrial processes for making textiles, metals like iron and steel, various goods, and machines were developed.
Average temperatures before 1850 are considered to be “pre-industrial”, and the Paris Agreement of 2015 aims to limit average temperature rise by 1.5 degrees Celsius from this period. (Temperatures today are 1.1 degrees Celsius higher, and expected to reach 2.5 degrees Celsius before the end of the century).
Just before and during this period, now-wealthy nations saw a sharp rise in wealth and resources due to access to poorer nations’ natural resources and labour through colonisation. In addition, the development process in these countries saw a steady rise in emissions.
According to an Oxfam paper published last year, the US, the UK, and the EU alone are responsible for 50 percent of all cumulative emissions.
Rich nations historically have contributed to over 92 percent of historical emissions. India is responsible for 3 percent of historic emissions, studies have found.
Today, as low and middle-income countries catch up, China has become the world’s largest present-day emitter with nearly 30 percent of global greenhouse emissions, according to media reports.
Losses and damages and future challenges
The term “loss and damage”, or L&D, was introduced in 1991 by the island of Vanuatu, one of the countries at extremely high risk from sea level rise, and a member of the Alliance of Small Island States.
In Glasgow, at COP26 two years ago, a coalition of 134 LMICs along with China, proposed the L&D fund. It was reported that the US, Canada, and Australia had “stalled” negotiations, demanding evidence of finances of damage.
Studies have shown that over 50 extremely vulnerable countries have been suffering over $500 billion in climate-related damages in the last two decades. The number is expected to go up as the intensity of the climate crisis worsens, with cumulative emissions making extreme events more deadly.
According to the World Bank, anywhere from 32 to 132 million people could fall into extreme poverty by 2030 directly due to climate change.
It is estimated that economic losses and damages for India from climate-related events would reportedly hit 35 percent of GDP by 2100.
The transitional committee on Loss and Damage, which represents members of LMICs from Africa, Asia-Pacific, the Caribbean and Latin America, least developed countries, and small islands developing states, has previously asked for the fund to ensure the availability of a minimum $100 billion USD annually by 2030.
“Although rules have been agreed regarding how the fund will operate, there are no hard deadlines, no targets and countries are not obligated to pay into it, despite the whole point being for rich, high-polluting nations to support vulnerable communities who have suffered from climate impacts,” said Mohamed Adow, founder and director of Powershift Africa in a statement,
He added that, if the World Bank proves “unfit for the task”, the establishment of a separate entity would be required for it.
Other representatives and officials from various LMICs echoed similar concerns.
Climate Action Network International’s Singh said that wealthy nations have had the World Bank host this fund as a “guise”, and have diluted their financial obligations to it. “The absence of a defined replenishment cycle raises serious questions about the fund’s long-term sustainability,” he added.
(Edited by Richa Mishra)
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